Ownership is one of the most critical aspects of nonfungible tokens (NFT). They are a representation of the evolution of execution and ownership of ar
Ownership is one of the most critical aspects of nonfungible tokens (NFT). They are a representation of the evolution of execution and ownership of art, content, music, in-game assets, etc., since they are digital assets with distinctive identities that are verifiable on a blockchain network.
However, they have also created a new dimension of discussion about the interaction and grey area around copyright, intellectual property (IP) and trademark laws.
In a recent highly publicized fiasco in the cryptoverse, crypto decentralized autonomous organization (DAO) Spice DAO was mocked for believing that the ownership of a copy of the unpublished manuscript of the film Dune granted them its copyrights as well. The DAO intended to produce an “original animated series” inspired by the book to be sold to a streaming service for which it would require copyrights. The book was won at a Christie’s auction in November last year for over $3 million.
In this case, copyright laws dictate that the copyright is valid throughout the lifetime of the creators and even 70 years after their death which entails that the DAO cannot make the animated series without the permission of the living co-creator, Alejandro Jodorowsky. Cointelegraph discussed this incident with Andrew Rossow, a technology attorney and Ohio law professor, who said:
“The Spice DAO and Dune fiasco was a landmark in its own right that sends a very powerful message to everyone involved in the NFT space — creator or owner. The $3-million mistake that was made proved that intellectual property’s dominion in digital fine art is essential to its success and longevity.”
While it might not be a secret that the ownership of an NFT doesn’t necessarily mean that the underlying copyright of the work has been transferred to the owner, it doesn’t seem evident to all market participants. Rossow explained that copyright law affords six “bundles of rights” or exclusive rights to a creator, which collectively establish their copyright. The first four rights are crucial to NFTs right now — the right to reproduce the work, the right to create derivative works, the distribution right, and the public performance rights.
Marie Tatibouet, chief marketing officer of cryptocurrency exchange Gate.io, spoke with Cointelegraph about the Dune fiasco, noting that anyone who did the proper research and due diligence would’ve known that the sale of a book’s copy had no copyrights attached to it. She said, “There still seems to be a wider misconception around what exactly NFTs are and what’s included when one purchases or trades an NFT in the space. As the industry develops, so will educational resources and a wider understanding of the market.”
Lawsuits begin to pour in
As things now stand, brands and companies have begun to crack down against NFT projects that violate copyright, IPs and trademarks. On Feb. 4, Nike filed a lawsuit against StockX for trademark infringement on Nike sneaker NFTs. The sneaker company has lodged a 50-page long complaint that claims the reseller has sold nearly 500 Nike brand sneaker NFTs impacting Nike’s reputation and legitimacy. Additionally, the shoemaker has accused StockX of selling the NFT sneakers at inflated prices amid “murky terms of purchase and ownership.”
Even French luxury fashion house Hermes has recently had a legal confrontation with Mason Rothschild, creator of Hermes Birkin bag-inspired NFTs MetaBirkins. Hermes mentioned in its complaint, the “defendant’s MetaBirkins brand simply rips off Hermès’ famous Birkin trademark by adding the generic prefix ‘meta’ to the famous trademark Birkin.” In response, the creator compared himself to Andy Warhol painting Campbell soup cans in that he is making art from a well-known commercial image.
Jeff Gluck, CEO of CXIP Labs — an NFT minting platform — discussed the incoming lawsuits with Cointelegraph. Gluck is also an IP and copyrights lawyer with over 14 years of experience in the legislative domain. He stated:
“There are dozens of artists preparing lawsuits against OpenSea for selling infringing NFTs. These examples are a sneak preview of a wave of litigation heading towards the space. It’s both good and bad in that it discourages creativity and growth in some ways, but it’s beneficial because it will ultimately help provide some guidelines in terms of clear legal parameters and guidelines for the space.”
Gluck further pointed out that one of the biggest problems NFT marketplaces are facing right now is that if they mint NFTs for their users and/or provide any level of curation, they are not shielded by the Digital Millennium Copyright Act (DMCA) and thus can be sued directly for copyright infringement by creators. The DMCA was passed in 1998 to implement the 1996 World Intellectual Property Organization’s Copyright Treaty and Performances and Phonograms Treaty. In part, it creates limitations on the liability of online service providers for…
cointelegraph.com